Save the Solar ITC!
Save the Solar ITC!
We ask the US Congress, the Senate, and the President to implement a Permanent 22% Solar ITC and a Direct Payment of the Section 48 Solar Tax Credits. These two measures will grow the economy, allow the solar industry to hire hundreds of thousands of additional employees, and will enable individuals and business owners to save money on their energy costs.
In 2006 the Solar Investment Tax Credit (ITC) was created to incentivize homeowners and businesses to install solar panels. This policy has been the most successful energy program in the history of the United States. It has fueled tremendous growth within the solar industry. Since 2006 it has created over 350,000 jobs and helped tens of thousands of individuals and businesses go solar, allowing them to save money and become more energy independent. Because of the solar industry, billions of additional dollars have flowed into the US economy.
In 2017 the ITC was given a five year extension with a gradual step down. It would go from 30% in 2019 to 26% in 2020 to 22% in 2021. After 2021 the ITC steps down to 0% for residential solar and 10% for commercial solar. Short-term ITC extensions provide much needed relief to the industry. However, they also create uncertainty for its future. Since 2006 solar panel costs have dropped significantly. As such, a 30% or even a 26% ITC is no longer needed. However, a 0% ITC would collapse the industry and eliminate hundreds of thousands of jobs. We need a permanent ITC solution that balances over-subsidizing solar with not providing any incentive at all.
In order to provide long-term stability to the solar industry and to properly account for the reductions in solar panel costs since 2006, we ask the US Congress, the Senate, and the President to implement a Permanent 22% Solar ITC. A permanent 22% Solar ITC strikes a perfect balance between over-subsidizing the solar industry and not providing an incentive for its continued growth. A Permanent 22% Solar ITC will eliminate industry uncertainty, establish a sustainable growth trajectory, create hundreds of thousands additional jobs, and allow millions of individuals to save money on their energy bills.
There is only one issue in establishing a Permanent 22% Solar ITC and that is the availability of tax equity. Tax equity is a broken system used to monetize most of the the Solar Tax Credits for commercial solar under IRS Section 48. Solar tax equity is controlled by only a few, very large banks. They act as the middlemen, determining which projects get money and which ones do not. Due to the COVID-19 pandemic, the availability of tax equity has shrank significantly. This means there are solar projects waiting to be installed because there is no bank tax equity available. A Permanent 22% Solar ITC without the availability of tax equity is like no Solar ITC at all. We need an immediate solution to address this issue.
In addition to a Permanent 22% Solar ITC, we request a Direct Payment of the Section 48 Solar Tax Credits. A direct payment allows the owner of a commercial solar property to receive the ITC directly without needing a large bank to sit in the middle. It converts the Section 48 Solar Tax Credits to refundable credits rather than nonrefundable credits. We ask the US Congress, the Senate, and the President to implement a Permanent Direct Payment of the Section 48 Solar Tax Credits. This eliminates the wait for solar projects that do not have bank approval of tax equity. It fuels growth for the solar industry and it does not cost the government money. It simply changes the way the tax credits are paid, no longer requiring a bank to direct the flow of money.
These two policies, a Permanent 22% Solar ITC and a Direct Payment of the Section 48 Solar Tax Credits are common sense solutions that create massive value. They create value for our economy, for individuals and business owners, and for American workers. It is a solution everyone can get behind!